Oil service firms rush to Saudi for busy drilling year ahead

Sun Oct 27, 2013 10:38am EDT
 
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By Braden Reddall and Reem Shamseddine

SAN FRANCISCO/KHOBAR, Saudi Arabia (Reuters) - Global energy service giants are banking on a boom in Saudi oil and gas drilling over the next few years to revive profits that are being squeezed by overcapacity in the North American market.

Schlumberger (SLB.N: Quote), Halliburton (HAL.N: Quote) and Baker Hughes (BHI.N: Quote) have all singled out Saudi Arabia as a major growth market for next year as they search the globe for better returns than the saturated U.S. and Canadian markets offer.

Dozens of offshore and onshore rigs are being lined up for drilling in Saudi Arabia in 2014, and service companies are expanding their Saudi operations to meet buoyant demand.

"We have a very close relationship with Saudi Aramco, and the plans that we see for next year are talking about 200 rigs," Gabriel Podskuba, area manager for the eastern hemisphere at steel pipe maker Tenaris SA (TENR.MI: Quote), told analysts earlier this month.

Industry sources in the Gulf said at least 160 rigs are currently deployed in Saudi territory and that the world's top oil exporter plans to raise its rig count to 210 by the end of 2014. Aramco SDABO.UL declined to comment.

Sources said earlier this year that Aramco was planning a sharp rise in rig use to look for unconventional gas, while increasing oil drilling to help keep its spare production capacity at comfortable levels.

The rigs will be used for exploration, development and maintenance work across the kingdom, the sources said. Aramco is also ramping up drilling in offshore oilfields such as Safaniyah, along with the Arabiyah and Hasbah offshore gas fields.

It is not clear where all the rigs will be deployed because Aramco has yet to issue the tenders.   Continued...